Assume a country is in a fixed exchange rate regime. Now suppose that individuals expect that policy makers will devalue its currency. Explain the various actions that policy makers can choose in response to this expected devaluation
What will be an ideal response?
Policy makers can attempt to persuade (via official announcements) that they remain committed to pegging the currency at its current rate. Second, they may have to raise domestic interest rates to prevent any depreciation of the currency. Eventually, they may be forced to devalue because of the contractionary effects of the higher i.
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What is a price ceiling?
What will be an ideal response?
All of the following might create problems from financial liberalization in emerging countries EXCEPT
A) ineffective screening of borrowers. B) limits on risk-taking. C) lax government supervision of banks. D) lenders failure to monitor borrowers.
Describe the basic features of the circular flow diagram
Please provide the best answer for the statement.
If an employer pays employees according to the volume of business revenue they individually generate, then the employer is applying the
A. contributive standard. B. productivity standard. C. merit standard. D. all of these.